Higher building costs and rising mortgage rates have added almost 10 percent to the monthly cost of buying a new home in D-FW so far this year.

Higher interest rates aren't the only thing pushing up new home costs.

Billions of dollars in tariffs on imported lumber, steel and other building materials are adding thousands of dollars to the price of new North Texas homes.

Rising costs of building materials — including higher cost of labor and land — are becoming the biggest challenges for the nation's homebuilding sector. That is especially true for builders in Dallas-Fort Worth, where at least 32,000 new homes are expected to be built this year — more than any other U.S. metro area.

"All these tariffs are adding up to major increases for us," said Dallas custom homebuilder Jeff Dworkin. "It's hard to even guess right now what your lumber prices are going to be for a job. Lumber companies are only giving us 30 days notice at best to rising prices."

Lumber is the biggest component of a new home. An average house last year had more than $60,000 in wood products.

Much of that lumber price increase is from the Trump administration's recently imposed 20 percent tariff on Canadian lumber and softwood products.

Higher steel prices caused by recent trade tariffs are also hammering builders, said Robert Dietz, chief economist of the builders association.

"Steel prices affect multifamily, single-family construction and remodeling, as well as appliances and components," Dietz said. "Tariffs acts as a tax on homebuyers and renters by increasing the cost of building and improving housing."

Mid-Continent Nail, the nation's largest manufacturer of nails used in building, recently said it is laying off dozens of workers at its plant and may shut down altogether by Labor Day because of the 25 percent tariff on steel from Mexico and Canada.

And builders and designers are scrambling to find alternatives to popular quartz countertops because of threats of tariffs on those products imported from China.

"For a couple of years, the big concern with builders was all about labor," said Ted Wilson, principal with Dallas-based housing analyst Residential Strategies Inc. "This year, it's been all about materials prices.

"If you combine that cost increase along with the move in the 30-year mortgage rate, that exact same house you were buying at the first of the year, the monthly payments are now about 10 percent higher," Wilson said. "The consumer is already trying to digest these higher payments from materials and interest rates."

Wilson said homebuilders in North Texas were already running into price resistance from buyers before this year's production cost increases. New home prices in the D-FW area are at a record level — about $100,000 more than a median-priced preowned home.

To keep new home prices from ballooning, builders are looking for places to trim costs.

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"We don't think we can pass 100 percent on to the consumer," said Jed Dolson, Texas region president for Dallas-based builder and developer Green Brick Partners. "We've tried to mitigate it by taking some features out of a home we would have provided a year ago — for instance hardwood floors in the master.

"The main way we are mitigating it is building smaller square footages on smaller lots."

Dolson said his firm, which will build about 2,300 houses nationwide this year, is expanding its lower-cost townhome and patio home offerings.

"Our townhomes are in the $200,000s and $300,000s and our patio homes are in the $300,000s and $400,000s," he said. "Not that many people in D-FW can afford a $500,000 single-family home."